About two weeks ago, the cryptocurrency industry faced yet another rug pulling accusation. This time, gambling platform and blockchain casino ZKasino was at the center of criticism, with many investors claiming their money was missing.
Despite these claims, ZKasino continued to post X updates before disappearing from the public eye with investors’ money. In the latest development, Dutch authorities arrested a suspect and more than $12 million was seized in the process.
Suspected cryptocurrency fraudster arrested
The Dutch Financial Intelligence Unit (FIOD) said Wednesday that a 26-year-old man was arrested earlier this week on suspicion of pulling a ZKasino rug.
Dutch authorities began investigating a $33 million cryptocurrency gambling platform fraud on April 25, according to a press release. The criminal investigation began with online reports from the cryptocurrency community and information from the FIOD intelligence unit.
Members of Binance’s Financial Crime Compliance team assisted FIOD during the investigation, helping to “secure millions of euros in cryptocurrencies.” Likewise, the Prosecutor’s Office helped the investigative team contact members of the ZKasino team.
FIOD arrested a man on April 29 on charges of ‘fraud, embezzlement and money laundering’. The suspect was produced before a magistrate and his detention was extended to 14 days for ‘investigative purposes’.
As part of the investigation, authorities searched the suspect’s home and seized approximately €11.4 million worth approximately $12.25 million in various assets. FIOD seized real estate, luxury cars, and various cryptocurrencies.
Dutch authorities have not ruled out further arrests as the cooperation of the fraudsters involved will be needed for victims to recover and return the stolen money.
ZKasino, a scam from the beginning?
As Bitcoinist reported, rumors of a cryptocurrency gambling platform scam began back in March, when decentralized exchange (DEX) ZigZag made serious accusations against the project. According to rival cryptocurrency exchanges, ZKasino failed to pay developers and other contractors who helped build the platform.
Moreover, ZigZag claimed that the funding and project evaluations were likely fake. The post added that the previously announced $40 million ecosystem is not real and will most likely not be paid out in real currency.
Despite the alarms being raised, confidence in cryptocurrency projects did not completely collapse until April 20th. After the changes began appearing on the website, users began reporting suspicious activity.
As one The platform section states that once the chain and its native token, ZKAS, are activated, the bridged Ethereum will be returned to investors. However, the content has reportedly been deleted.
Where is our ETH? pic.twitter.com/fV3d5iFbq4
— Noe G (@0xNoe) April 20, 2024
It is worth noting that ZKasino led investors to believe that they would get their investment back within 30 days. The team has promised the ability to withdraw bridged Ethereum 1:1. Instead, users found their funds locked in ZKAS with a vesting period of 15 months.
Concerns grew when the bridge became inaccessible after the chain came online. The team later claimed it was “down for maintenance and will be reworked with this release.”
The project’s X account continued to post updates until April 24, when it announced that Bridge had become active again. Despite users’ complaints about stolen funds, the post added that users can “transfer $ZKAS from the ZKasino chain to Ethereum.”
After this final post Failure to resolve the situation confirmed users’ suspicions that they were solid. FIOD’s investigation noted that ZKasino’s promises were never intended to be kept. This is because the setup of the smart contract implies that “return is not intended” of the funds.
Total crypto market cap is at $2.22 trillion in the bi-weekly chart. Source: TOTAL on TradingView
Featured image from Unsplash.com, chart from TradingView.com